Reference no: EM132900366

Shoppers don't buy everything they need at one store. Instead, they buy toys at the toy store, and groceries at the grocery store. Consumers only visit Target when they need the items they associate with Target. This happens even though Target sells everything from milk to clothing to lawn furniture to electronics. Target's goal is to convince consumers that Target is the only store they really need, but this is a tough message to get across because consumers' shopping habits are so ingrained. Realizing that new parents are the retailer's holy grail, Target is identifying consumers who are in this period of their life, when their routines typically fall apart and opportunities arise to change their buying habits. This happens right around the birth of a child, because parents are exhausted and overwhelmed. In this state of mind their shopping patterns and brand loyalties come up for grabs. With birth records usually being public, the moment a couple has a baby they are quickly barraged with offers and advertisements from all sorts of companies. This means that, to be successful, Target needs to reach them before any other retailers know a baby is on the way. With specially designed ads, Target wants to reach women in their second trimester, when most expectant mothers begin buying things like prenatal vitamins and maternity clothing. According to Target's Andrew Pole, "we knew that if we can identify them in their second trimester, there's a good chance we could capture them for years. As soon as we get them buying diapers from us, they're going to start buying everything else too. If you're rushing through the store, looking for bottles, and you pass orange juice, you'll grab a carton. Oh, and there's that new DVD I want. Soon, you'll be buying cereal and paper towels from us, and keep coming back." Many see this approach as "creepy," so Target has started to change its reach-out strategy. Target now mixes in coupons for things like wine and lawnmowers with those for pacifiers and baby wipes. With this strategy 3/20/2018 IEB Wireframe https://textflow.mheducation.com/parser.php?secload=9.f&fake&print 5/12 pregnant women use the coupons without realizing that Target knows they are pregnant. As Pole told The New York Times Magazine, "Even if you're following the law, you can do things where people get queasy." Target collects vast amounts of data on every person who regularly walks into its stores for decades. When possible, Target assigns each shopper a unique code (Guest ID) that tracks everything they buy. "If you use a credit card or a coupon, or fill out a survey, or mail in a refund, or call the customer help line, or open an e-mail we've sent you or visit our Web site, we'll record it and link it to your Guest ID," Pole said. "We want to know everything we can." Target is then able to link demographic information (age, marital status, location of your house, etc.) to you through your Guest ID. In addition, Target can also buy data. This data can include things like: Ethnicity College attendance Job history Year of house purchase Bankruptcy declaration Marital status Preferred brands Charitable contributions Page 333 Preferred magazines Political beliefs All this information is meaningless, until someone analyzes it and makes sense of it. That is where the members of Target's Guest Marketing Analytics department come in, using "predictive analytics," which allow Target to understand not just consumers' shopping habits but also their personal habits. This understanding allows Target to market more efficiently to them. According Eric Siegel, a consultant and the chairman of a conference called Predictive Analytics World, "Target has always been one of the smartest at this and it is amazing how much they can figure out about how people think now."41

1. How is Target using CRM to drive consumers to its stores?

2. How would you classify what Target is doing in terms of the types of CRM systems?

3. In your opinion what types of best practices need to be adopted when companies like Target start using predictive analytics in the CRM system?

4. Read Kashmir Hill's February 16, 2012, article "How Target Figured Out a Teen Girl Was Pregnant Before Her Father Did" (www.forbes.com/sites/kashmirhill/2012/02/16/how-target-figured-out-a-teen-girl-waspregnant-before-her-father-did). What would your reaction to this situation be?